Worlds Inc. v. Bungie, Inc.
903 F.3d 1237 (Fed Cir. 2018)
Back in September 2018, the Federal Circuit reversed the PTAB decision to invalidate U.S. Patent Nos. 7,945,856, 8,082,501, and 8,145,988 because the board had not adequately considered all real parties in interest during the inter partes reviews. All three patents relate to method and systems for displaying computer-generated avatars in a virtual world. Worlds Inc. owns all three patents. Bungie petitioned the PTAB to institute the IPRs and invalidate the three patents.
This case arises out of another case, Worlds Inc. v. Activision Publishing. In 2012, Worlds asserted a number of patents against Activision claiming games like Call of Duty infringed. At the time, Bungie was not a party to the litigation, but then in 2014, Worlds notified Activision of its intent to add Bungie, claiming the game Destiny also infringed. Bungie filed the petitions for the three IPRs six months after Activision received the notice. It is important to note that between 2012 and 2014 Activision had not filed any IPRs, which means its one-year deadline to file had lapsed. When Bungie filed its petition for IPR proceedings, it did not name Activision as a real party of interest. Worlds argued that Bungie should have named Activision as a real party in interest because of a Developer-Publisher agreement between the two video game companies. The PTAB rejected Worlds’ argument and went on to invalidate the patents. Worlds appealed to the Federal Circuit.
An IPR petition “may be considered only if . . . the petition identifies all real parties in interest.” 35 U.S.C. section 312(a)(2). Identifying real parties in interest becomes important in an IPR proceeding because it can affect whether the petition is subject to a time bar; therefore it is important who has the burden to prove who is a real party in interest. The Federal Circuit clarified that the burden to demonstrate the petition is not time-barred belongs to the petitioner. However, the PTAB may properly take the petition’s assertions regarding real parties in interest at face value until the patent owner can demonstrate some evidence that there may be an unnamed real party in interest. If the patent owner does present evidence of an omission of a real party, then the burden of persuasion requires the petitioner to prove it has satisfied its section 312(a)(2) requirements.
During the IPR proceedings, Worlds did present to the PTAB the Developer-Publisher agreement as evidence that Activision is a real party. In the agreement is a provision that requires legal reviews of a ‘Product’ to be cleared by Activision. Worlds argued that the IPRs constituted a legal review of a product, therefore, Activision would be able to dictate the direction of the proceedings, making it a real party in interest. The PTAB rejected these arguments and instead relied upon Bungie’s assertion that it was solely responsible for the IPRs. In reviewing the PTAB’s decision, the Federal Circuit seemed disturbed by the board’s reliance on Bungie’s assertions and more particularly the board’s refusal to place the burden back on Bungie after the agreement came to light. The Federal Circuit vacated the PTAB’s decision and remanded for reconsideration of the issue of whether Activision was a real party in interest, which would result in the petition being time barred.
This case is still ongoing and we will provide updates when available.